Dive Brief:
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In an attempt to improve finances, county hospitals are buying and leasing nursing homes to pick up more Medicaid funding, Kaiser Health News reports.
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Hospitals can get more Medicaid funding per nursing home resident by owning or leasing the facility. This could mean another 30% more federal dollars per Medicaid recipient.
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County hospitals own or lease about 90% of Indiana’s nursing homes, which has meant millions in extra funding.
Dive Insight:
Health systems are on the lookout for ways to improve their bottom line. Private payers and the CMS are creating policies that are causing fewer inpatient admissions and lower reimbursements for hospitals, which is leading the facilities to search for new funding sources. Hospitals have responded in some cases through M&A activity in hopes of improving operating margins, consolidating services, growing their footprint and realizing economies of scale. However, that doesn’t always improve margins.
Other hospitals have invested in outpatient centers as a way to recapture some of that lost revenue and, as Kaiser Health News reported, county and rural hospitals in Indiana, Pennsylvania and Michigan are enjoying more Medicaid dollars through nursing homes.
Each avenue to gain more funding has its benefits and drawbacks. Investing in nursing homes brings its own unique challenges, including concerns about quality.
HHS’ Office of Inspector General (OIG) recently issued an alert raising quality of care concerns for skilled nursing facilities. The OIG is investigating elder abuse and 134 cases of Medicare beneficiaries who may have been victims of neglect or abuse between in 2015 and 2016. The OIG said CMS’ procedures are not adequate to protect nursing home residents.
Given OIG’s report, CMS may soon begin to focus more on assuring better quality at nursing homes. This added focus could mean a larger investment for hospitals to make sure their nursing homes are complying with industry standards. This added investment would likely be worth it for the hospitals, as an affiliated nursing facility being hit with violations would look poorly for the whole health system.